Lorillard Inc could be a takeover target, perhaps at a "sizable" premium to its current share price, according to the latest issue of Barron's. Possible Tobacco Mergers/Acquisitions Involving Lorillard.. - March 17, 2009.
There lately has been talk that Reynolds (RAI.N), maker of the Camel (a growth brand - R.J. Reynolds focuses its investment in Camel and Pall Mall to accelerate the brands' market-share growth and to drive the brands for long-term, accelerated growth and profit.), Winston and Kool brands (both are support brands - R.J. Reynolds will put limited marketing support behind these brands and focus on balancing the brands' scale and long-term profit.), might buy Lorillard for a sizable premium above the recent share price of $61," Barron's reports in its March 23 issue. It said Reynolds and Lorillard declined to comment.

Barron's also reports that, "If Lorillard does go on the block, there could a bidding war that includes Reynolds, Britain's Imperial Tobacco, Japan Tobacco and perhaps even Philip Morris International."

The article said that even if Lorillard is not a takeover target, its shares may be undervalued. "Lorillard has the best developed-market tobacco business in the world," David Adelman, the cigarette analyst at Morgan Stanley, was quoted as saying.

Lorillard cannot do what some competitors have done and focus on overseas for growth. In 1977 Lorillard sold the rights for international sales of its cigarette brands to British American Tobacco (BAT). (TobaccoWatch.org)